A New Domestic Accounting Model based on Domestic Well-Being

Overview of Rationale and Tech Introduction

Other articles on Domestic Well-Being Accounting (DWBA) have hinted about the new ideas after which this new domestic accounting model is based. In this article, the reason, ideas and concepts are summarised, based on the coverage in a new book ‘Accounting for a Better Life’. Irenas Bookkeeping

Accounts

In its simplest, an accounts is merely a couple of transactions relating to some part of financial activity or interest. The most familiar form of account is the bank statement that customers periodically receive from their bank. 

The first important thing to appreciate is that accounts are for accumulating information about value. We are accustomed to bank and mastercard data files which are all about currency that folks sometimes do not realise that data files are equally useful for accumulating transaction details relating to, for example, our home, our car(s) – one account for each and every car – our investments, and so forth

Accounts will usually have two copy, one for increasing (+) amounts and the other for decreasing (-) portions.

The next important idea is to appreciate that there are two distinctive, overarching types of data files that we can use within our sets or literature of accounts. One is called a property accounts and the other is a liability account.

The asset type account as its name infers, typically relates to storing ventures for assets such as checking accounts, houses, cars, and many others. The concept behind this is that positive amounts came into into the + steering column of an asset bank account signify increasing value; so? 500 entered into the + column of an asset account implies an increase in value of? 500. However accountants will also have in their business accounts, what My spouse and i call working accounts for home accounting, as other accounts of the advantage type which are not strictly for an advantage for example a car or home. For example accounts for advantage acquisitions as well as for depreciation.

That other overall type of account is a responsibility account. It can be used for accumulating debts and/or responsibility. Now we have the reverse concept in that increasing amounts e. g.? 300 in the & column of these kind of documents imply more debt or more liability, whilst a decrease of? 200 signifies less of a personal debt. You may think more debt means less value but it all is determined by the reason for which a liability consideration is being used. Once again, accountants mostly use the liability type accounts for keeping true debt amounts but again, have a need for other accounts of the liability type to mediate certain transactions. I actually refer to these as working accounts in home accounting as they do not connect with any true debts of your person or household; instances of these are for accumulating momentary information about asset acquisitions and growth in the cost of a home.

Another area for confusion here pertains to the names for line headings used in the several software packages offered to support accounting; in business, the convention is that debits (the + column for asset accounts and the – column for the liability accounts) are traditionally in the left-hand column of each account, with the credits on the right (the – column of asset accounts and the + column of legal responsibility accounts). This convention is not always followed in some software packages, jointly with never using the headings, debit and credit.